Saturday, May 31, 2008

Socratic Philosophers Starting From False Premises

The Socratic Society (HERE) announces it next Discussion Group on 3 June – “Ethics and Economics”:

“Adam Smith, a Scottish moral philosopher and political economist, wrote one of the most influential pieces for market based economics. In ‘The Wealth of Nations’ (1776), he held that the ‘invisible hand’ of the market, along with free trade in a laissez-faire system, was the most desired method of organising and structuring an economy and is still taught in economics. However, Smith included certain moral restraints within this piece which have largely been forgotten today.

Economics has also taken some of its most important theoretical material from Utilitarianism, created by Jeremy Bentham and John Stuart Mill, which is the idea that the moral value of an action is determined solely by its contribution to the overall utility in maximizing happiness or pleasure of the greatest number. There is clearly a link between the two disciplines both in their origins and in their intended purposes. But in today’s consumerist society is this link still visible or has the increasing desire for economics to be seen as a scientific subject created a gap that is now too wide to recover from and is there a need for ethical considerations in the area or economics or should we leave the market alone?”

CommentMemories of late-night undergraduate philosophy debates remind me that there is something in it about the conclusion being only as good as the premise (or was that a logic debate?).

Adam Smith did not say anything about or similar to “the ‘invisible hand’ of the market, along with free trade in a laissez-faire system, was the most desired method of organising and structuring an economy and is still taught in economics”.

The metaphor of ‘an invisible hand’ did not refer to markets, nor was it mentioned in his chapters (Books I and II) on markets, and neither did he refer to ‘laissez-faire’ anywhere in anything he wrote.

Despite these facts, the only part of the first sentence that is true that the myth of the invisible hand and the words laissez faire are “still taught in economics”.

But they have nothing to do with Adam Smith on markets and are only believed to be so because repeaters of the canard have not read Adam Smith’s Wealth Of Nations, but have copied what their tutors (who almost certainly have not read him either) told them.